"While the recession appears to be over for the economy, in commercial real estate it is not so visible," company president and CEO Julien J. Studley tells GlobeSt.com. "Consequently, now is a good time in the market for tenants, something which is rarely discussed."
Defense and security spending under the Bush administration continues to aid the Washington, DC market," says Studley. "You've got new troops, new weapons," he explains. "The FAA is hiring 30,000 people after they took over airport security. That results in real space needs."
Largely because of that need, the downtown DC market remains among the most vigorous in the nation--despite the increase in availability from 5.5% at year-end 2001 to 6.2% in Q1 '02, claims the report. Leasing activity increased more than 30% inm that same period, with major deals coming from the federal government and law firms.
That's a stark contrast to the San Francisco office market, which continued its retreat to mid-1990s rent levels, according to the report. Average asking rents stand at $29.66 per foot and are expected to decline further. "It is difficult to tell owners here that they aren't going to make money," says Studley. "The adaptation they must make to the tech bust is not an easy one."
The market is tepid in Chicago as well, which started the year with leasing volume of 1.4 million sf--down 35% from Q4--and nearly 50% from the same period the previous year. The average rental rate for office space stands at $23.77 per sf, while overall availability hovers near 20% for the 45 million sf on the market, according to the report.
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